India’s central bank unveiled its annual monetary policy Tuesday, slashing its key lending rate by an unexpected half percentage point to 8%, in a bid to stimulate economic growth.

This was the first time the Reserve Bank of India reduced its lending rate in three years, a move that was welcomed by economists and industrialists.

Several newspapers responded to the RBI’s credit policy Wednesday. While some editorials and commentators praised the apex bank’s bold rate cut, others noted there was little more it could do to ease liquidity and accelerate growth.

Here is a roundup of what Indian newspapers and commentators had to say on the RBI’s annual monetary policy:

Headlined “RBI leaves it to govt now,” a Financial Expresseditorial argued that the “RBI has silenced all critics” by an aggressive interest rate cut, including those within the Indian government who claimed the bank has failed to ease sluggish growth.

While the piece praised the move, it cautioned that a steep cut can alone “do little to stimulate either investment or growth.” By slashing key its key lending rate, the “RBI has very clearly put the ball back where it belongs: with the government,” it read.

“So, instead of making the usual noises about fiscal slippages, RBI has pointed out supply bottlenecks in infrastructure and…. put the government on notice, saying it cannot do anything more if the current account deficit is not fixed, if expenditure is not kept in check and if supply bottlenecks are not fixed,” it argued. “Even RBI’s critics can’t say it’s wrong,” the editorial concluded.

“A judicious policy in challenging times,” is how Bank of Baroda’s Chairman and Managing Director M.D. Mallya described the monetary policy in a Business Standardcolumn.

Although Mr. Mallya noted that the steep interest rate cut send “a strong signal of monetary easing,” he cautioned that further cuts would come at the risk of “aggravating inflation.”

“The RBI’s future guidance clearly says persistence of upside risks to inflation inherently limit the space for further reduction in policy rates. This means, the central bank has made best possible use of the available opportune time to kick-start growth,” he wrote, commending the half percentage point cut.

Noting that the bank’s proposed policies would “ease domestic liquidity conditions,” Mr. Mallya further went on to label the RBI’s proposed growth outlook as “positive and encouraging.”

“To conclude, the Monetary Policy for 2012-13 has delivered bold policy actions warranted by the challenging economic environment,” he wrote.

But not everyone was impressed.

Titled “sober thoughts,” an editorial in The Telegraph outlined “a number of warnings” in RBI’s monetary policy. First: “What the RBI governor is underscoring is that the central bank has done all it can to increase GDP growth; the rest is up to the government.”

“The second warning is that the decline in inflation is actually a mirage,” the piece added, noting that inflation rates would skyrocket as soon if crude oil prices are deregulated further.

The third warning, the editorial argued, is that “additional liquidity would come at a price.” In the absence of a simultaneous cash reserve ratio cut, additional liquidity would only be available through a higher cost of marginal standing facility, it claimed. This, the piece noted, would compel banks to review their liquidity management strategies.

The fourth and final warning, the editorial said, is that aggressive interest rate cuts leave “little room for more.”

“RBI rate cuts alone can’t revive growth,” read an editorial in the New Indian Express. While the piece noted that an interest rate cut sends “out a strong signal to a floundering Indian economy,” it argued that the decision may generate “disinterest by banks in accepting deposits.”

“The quantum of solace for the public may not be totally in sync with what the RBI has set out to do as the banks would come out with their own methods of balancing deposits and loans,” it read.

The piece went on to stress that the Indian government’s strained policy outlook is a major factor hampering economic growth.

“It is high time the government shrugged off its inertia and dusted off a few policy initiatives — FDI in retail, aviation and pension funds among those keenly watched by offshore investors.” With skewed fiscal deficits and slumping industrial production, “the government is fast running out of options,” the piece concluded.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.